dailys grind

A commitment to compliance and community powers Daily’s in its quest to be

Rick Hamilton had seen just about everything by the time he decided to enter the convenience retailing business.

After returning home from a tour of duty in Operation Desert Storm in the early1990s, he settled in Nashville and went to work as a counselor for juveniledelinquents. Counseling troubled teens proved fulfilling but mentally draining,so Hamilton sought out other career options. He answered an ad for a job opportunityat a “fuel center” and, since he served in the Army’s petroleum, fuels &transport division, figured it might be a good fit. But when he drove up tothe address listed in the ad, he found himself at the entrance of a conveniencestore lot. He took the job as manager of a truck stop.

Thirteen years later, after moving up the ranks from store manager to district manager to his current position as director of operations for Daily’s Convenience Stores/Tri Star Energy, Hamilton has helped the Nashville-based retailer trim its operations to become a leaner, more flexible competitor. The company, which was formed about four years ago by the partnership of Kimbro Oil, Parman Oil and Motiva, started with 97 locations. It has since weeded out the non-performers to become a chain of 64 primarily Shell-branded stores.

“We converted several locations to our dealer network and put some lipstickon a few, but now we feel we’re pretty stable,” says Hamilton. “This company—justlike this business—is a living, breathing thing. It’s ever-changing.”

Daily’s stores aren’t afraid to experiment with new ideas and new concepts. Hamilton points to a unique candle program brought in by Daily’s wholesaler, in which stores sold scented candles for $1 each. Hamilton didn’t expect the candles to catch on in a market like Nashville, but almost every store sold out of the candles. He credits much of the chain’s success with programs like this to the dedication of its store-level people.

“We interview about 60 people per week, and only eight to 10 make it to our training process—we’re looking for the best,” he says. “We’re in every store every month, but we’re not looking for things to fix; we’re there to tell [our employees] we appreciate what they do for us.”

This hands-on approach has helped Daily’s maintain associate-level turnover at well below the industry standard, according to Hamilton. All employees must pass a basic math test and a drug screen, as well as provide references. Once that happens, potential employees follow a three-day in-house training process, then shadow a manager for two days before coming face to face with customers.

“We want employees to give us some personality and come in dressed for success,” he says. “They’re going to be meeting and interacting with 800 to 1,000 customers per day, so they have to make a good impression.”

A passing gradeStore-level employees have also made a good impression on local law enforcement.Nashville has two organizations that conduct compliance tests for selling age-restricteditems: the Metro Beer Board and the Metro Police Department. Daily’s conductsits own stings as well, just to reinforce its policy of carding every customer100% of the time. Employees that pass Daily’s own stings automatically receivea $10 gas card. Employees that don’t pass a Daily’s sting get suspended withoutpay; the company has a “two strikes and you’re out” policy for its own stings,which the chain has been conducting in its stores for about three years.

Daily’s provides employees with plenty of assistance. For sales of all age-restricted items, the point of sale instructs associates to ask for ID and enter the customer’s entire birthdate, at which point it will tell the employee whether or not to complete the sale. Hamilton also sends out e-mails regularly to remind employees of the company’s policy.

“At store-level, we have employees sign a sheet at the beginning of every shift stating that they know the policy,” he says. “This reminds them as they’re starting their day and lets them know that this is important to us. We also have them sign a monthly sheet reminding them of the policy and have our DMs make sure that every store signs this by the 10th of each month. We’ve been doing the monthly sign-in sheet for about two and a half years and the shift procedures for about one year. Each one has had an impact on our success with stings.

“We take every step to make sure we don’t sell to minors—we take it asa challenge,” he continues. “It’s about compliance but it’s also about our imagewithin the community; we’ve come a long way, from our ID policy to our uniforms.Nametags are a required part of the uniform, and shirts must be tucked in unlessemployees are wearing smocks.”

Store managers drive the compliance process and the adherence to image standards, according to Hamilton, and a bonus program provides added incentive. In addition to reducing the impact of stings, the bonus program has helped the company rein in shrink.

“Our bonus programs allow managers to add up to $18,000 per year to their income,” Hamilton says.

In Daily’s first quarter of this year, about 80% of store managers received some sort of bonus. Hamilton is quick to note that there are some “reducers,” such as overspending on payroll or failing a sting. There are some “disqualifiers” as well, such as failing two stings or overspending on labor by 2% or more.

Prepared for growthDirector of Marketing and Merchandising Ron Motley can barely contain hisexcitement over Daily’s current project: store-level automation. Daily’s hasdeveloped its own pricebook automation; all stores are scanning in, and morethan 75% of the network is scanning out. Daily’s is also currently refiningthe reporting piece of this project. The chain expects this capability to provideall levels of management with real-time sales data and reporting, thereby creatinguseful tools to better control the business and increase sales and margins.

“I’ve been in this business for 35 years and I’ve always been primarily dealing with purchase data,” Motley says. “Now we’ll have the chance to deal with real-time sales data as well. From a marketing standpoint, it will bring flexibility and give us the chance to do some multi-pricing, which will allow us to merchandise and market even better location to location.”

Presently, store managers key in their sales figures at the close of business and e-mail the information to headquarters, and then staffers from Daily’s HQ call to follow up and confirm. With the new automation in place, the transmission will be automatic, meaning store managers will be on the floor managing the business—not doing paperwork. In addition to freeing up store managers, Motley says the automation will also provide benefits in the form of true category management and help the company identify which SKUs will optimize each category set.

“The possibilities are almost unlimited to us, and we do know that we’ll beable to be even more effective store to store, and at the same time we expectto pick up some margin,” he says. “We should be able to improve on the perceptionthat we can be competitive with value pricing—that’s a new realm.”

Daily’s has already dabbled in that area, with its own brand of bottled water, for instance. Daily’s brand represents more than 25% of total bottled water sales, with multiple package sizes, including bulk and multi-packs. A 16.9-oz. bottle of Daily’s water retails for 89¢, compared to a 20-oz. Dasani or Aquafina, which retails for $1.19; a 33-oz. bottle of Daily’s retails for $1.49.

“Daily’s is our No. 1 selling water,” says Motley. “Overall, our bottled waterpresence has expanded significantly. We expanded from half a door two yearsago to a door and a half this year. And now that the flavored waters and thevitaminenhanced waters like Fruit20 are kicking in, the entire category is reallystarting to grow. The same with energy drinks; two years ago we had half a shelf,and now we have three shelves. The non-carbonated section has really exploded…again.”

Another example of a value-type initiative wasn’t as much of a home run. In 2004, the company began testing a Daily’s Savings in-store dollar section, featuring bargain grocery SKUs, general merchandise and other items. After monitoring the concept in 10 stores for more than a year, the company has decided it did not provide sufficient returns. It will still do some bin merchandising on key novelty or GM items that move quickly, but the take-home grocery items will be discontinued.

NCSAG heads for Nashville

You caught a glimpse of Daily’s here, but you can learn more first-handabout this chain and other Nashville-area operators in September, whenthe National Convenience Store Advisory Group (NCSAG) heads to the nation’sCountry Music Capital for its 2005 Winter Conference.

Daily’s, along with several other marketers, will be part of the NCSAGStore Tour—just one of many opportunities attendees have to improvetheir business. Turn to p. 16 to learn more about NCSAG’s educationalprogramming, like the LoveFest™. The weekend conference beginson Friday, September 9 at Nashville’s Sheraton Music City hotel and conferencecenter.

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